Net CIO: Technology Becomes Power

By Cate T. Corcoran, The Industry Standard
25 January 1999

The Internet has brought computer types out of the basement and into the boardroom, and nowhere is that more apparent than in the changing role of the Net company’s CIO.

For the first time, information technology folks are moving out of careers that narrowly focus on the nuts and bolts of technology. With more companies putting their public faces online, IT people are increasingly making essential strategic business decisions.

At Charles Schwab in San Francisco, where the company has been migrating to a pure Internet play, the CIO has always worked closely with the business teams, says Dawn Lepore, executive VP and CIO, who was promoted to this post five years ago. However, this work is now really paying off: IT employees are being promoted into other business units.

Gideon Sasson, for example, started out as a senior VP of electronic brokerage technology, where he managed the systems behind Schwab’s online brokerage business. He’s now president of the business itself. In this post, he’s the key deal-maker, and has set up partnerships with Intuit (INTU) and Excite (ATHM).

Perhaps more significantly, Bob Duste was promoted from senior VP of international technology to CEO of Schwab Europe.

“We now have dual career paths. Either you can aspire to senior management within the tech organization or in different business areas,” notes Lepore.

The job of the Internet CIO requires new skills, some that are obvious and others less so. Probably most important is understanding and managing large and unexpected volumes of Web site traffic.

“At (AMZN), the buck stops at [ CIO] Rick Dalzell’s desk for many more aspects of the value chain than in traditional businesses,” says Robin Reed, a San Francisco-based recruiter who specializes in Internet CIO searches.

At 24/7 Media (TFSM), a New York-based Internet advertising sales company, the job of the CIO is intimately wrapped up with developing and delivering the company’s main product. CIO Ron Johnson is as much a part of the key executive team as his “chief officer” peers. He oversees all technology planning, from back-office database systems to ensuring that 24/7 lives up to its name.

“Being in a start-up business, it’s absolutely critical for people in my position to work on the strategic vision of the business,” Johnson says.

CIOs are also appearing at the table during partnership deal discussions. Without their technical know-how, agreements that involve anything from outsourcing credit-card functions to fulfillment, marketing swaps or replenishing inventory could fall to pieces. “Every time we have one of these discussions, I’m there from the technology perspective of what can we support and what would be the potential cost and timing involved,” says Steve Rubinow, CIO at online ad firm AdKnowledge in Palo Alto, Calif.

The trend is fairly visible at Internet companies, whose every move depends on strategic technological moves. But the Net is changing the CIO job in all industries.

Take Laura Limbach’s new post as CIO at advertising agency Saatchi & Saatchi (dossier). Her past IT jobs included standard tasks – upgrading infrastructures from terminals to networked PCs and the like. But at Saatchi, she’s involved in the company’s core business. She helped put together a central online location called the Brain, where employees and clients can collaborate on projects.

“We’re an ideas company, and we need to communicate our ideas clearly and efficiently to our clients and our own staff around the world,” she says. Because of the Brain, Saatchi can come up with better ideas and offer faster service to clients, she adds. For example, clients can preview ads in full-motion video over the Brain’s extranet. To get the job done, Limbach had to think beyond the technical aspects of communication systems; she had to consider the way real people communicate.

“The CIO position is no longer just nuts and bolts, what wire we put in or what button we turn on,” says Limbach. “If you aspire to be a CIO, you have to understand business basics.”

In many ways, that means knowing everything. At the very least, a new CIO has to speak the language of both business people and technical people. Ideally, a CIO will also have experience managing information systems, operations and product development; a business degree; and the ability to work in a high-stress start-up environment.

AdKnowledge CEO Scott Kauffman was looking for such a wunderkind when he lucked onto Rubinow, who has extensive experience at Fortune 500 companies and five degrees, including master’s degrees in computer science and business. 24/7 Media’s Johnson had previously moved from one start-up to another at Bell Atlantic (VZ), including its ISP business.

“The person doesn’t need to be as technical as they need to be a ‘doer,'” says Reed of her selection process.

Needless to say, such people are few and far between and recruiting demand far outstrips supply. Those who are around don’t come cheap. While an IT director at a law firm in a big city might take home $125,000, a good CIO can command a salary in the $200,000 to $500,000 range, according to David Cowen, president at Fanning Technical Search and iNet Staffing of New York City.

The reason for the top-dollar salaries isn’t just because good people are hard to find. Companies are getting pickier because there’s more at stake. The CIO is crucial to a company’s business, and many are controlling larger budgets. CIOs can often be the most highly compensated employees after the CEO.

But if you hire right once, you’re likely to keep the trend going, says Reed, as tech talent tends to travel in packs: “Hire someone who has an expert reputation and a following of great technical people. Great CIOs are always selling people on joining their group.”